Question
Gorgeous Gems Inc. (GGI) is a retailer of fine jewelry and is publicly traded. The jewelry is very high quality and GGI caters to a
Gorgeous Gems Inc. (GGI) is a retailer of fine jewelry and is publicly traded. The jewelry
is very high quality and GGI caters to a very wealthy segment of the population. GGI
has three retail locations throughout the city along with a central warehouse facility.
Cam Blessy is a junior auditor with the firm JKLM CPAs and has been assigned the
inventory section of the audit file. Cam has completed his review of the internal controls
over inventory and is satisfied that they are operating as intended and have assigned a
moderate risk of internal control failure. Cam is now beginning to do the substantive
evidence gathering for the completion of the audit. Cam's audit senior wants to make
sure Cam understands what is expected in the substantive audit programs and has
asked Cam to provide the following information:
a) Identify and explain three key audit assertions with respect to the audit of inventory.
(6 marks)
b) For two of the assertions identified above, design one substantive audit test that
would help provide evidence for that assertion for GGI. (4 marks)
c) For the audit of GGI's inventory, identify which assertion is the most important one
and explain why. (3 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started